University of Phoenix Rising and Immolating and What Ya Gonna Do About It?

by Paul Haeder / February 27th, 2013

I’ll sort of patch together some “stuff” around that ugly creation – the for-profit college model, University of Phoenix. First, the news breaking Feb. 25, 2013:

PHOENIX (AP) — Apollo Group Inc. said Monday that its accrediting body was considering placing the company’s University of Phoenix subsidiary on probation because of alleged deficiencies involving its administrative structure and governance.

Shares of the for-profit education company dropped 4 percent to the lowest level in 12 months.Apollo Group said in a Securities and Exchange Commission filing that the Higher Learning Commission, its accrediting body, notified the company Friday that a draft report found that the university wasn’t in compliance with certain accreditation criteria. A review team for the commission concluded that the university “has insufficient autonomy relative to its parent corporation,” Apollo said in the filing.

Apollo said on Jan. 8 that the commission told the university that a draft review report would include a recommendation that the university be placed on “notice status,” a lesser sanction than probation. Apollo said Monday that the recommendation had been changed to probation. If the commission approves that recommendation, the probationary period would last through the fall of 2014.

Okay, it’s the Apollo Group, whose CEO was making a cool 26 million dollars a few years ago. Now, U of Phoenix, part of the Apollo Group portfolio, is tanking.

But the report, which Apollo received last week, surprised company officials and industry analysts alike. It described “alleged administrative and governance deficiencies” that led to the call for probationary status, according to a corporate filing Apollo released Monday.

“Specifically, the review team concluded that the University of Phoenix has insufficient autonomy relative to its parent corporation and sole shareholder, Apollo Group, Inc., to assure that its board of directors can manage the institution, assure the university’s integrity, exercise the board’s fiduciary responsibilities and make decisions necessary to achieve the institution’s mission and successful operation,” the company said.

The university produces more than 90 percent of Apollo’s revenue. And company officials said Phoenix had become more autonomous since its last review by the commission, which was in 2002. The company also said its management structure is “customary” and designed to maintain the operational and financial well-being of its subsidiary, which enrolls 320,000 students.

“We believe that it is neither remarkable nor improper for a parent corporation to exercise appropriate influence over its wholly owned subsidiary,” Apollo officials said.

These corporations are schizoid — paying more for less, throwing money at incompetents, paying the hard workers and real thinkers and doers, NOTHING. Karma catching up?

Cappelli’s pay shot up more than 1,400 percent last year, and it’s far from clear what he did to deserve $23.5 million in stock and stock options; shares in Apollo, which owns the for-profit University of Phoenix, were up just 10 percent last year, and Cappelli isn’t even the company’s sole CEO. (He splits the title with Charles B. Edelstein, who received an even bigger options grant in 2008.) Stock options are supposed to give CEOs an incentive to promote long-term growth, but that clearly hasn’t worked at Apollo. Since January 2008, it has underperformed the S&P 500 and most other education companies. In 2012, its stock is down 40 percent.

John and Barbara Ehrenreich, “Death of a Yuppie Dream.” This is all about the PMC, the professional managerial class. Here’s a passage tied to educators – again, everything in School Yard Fights ties back to who we are in the neoliberal world of high finance and low humanity.

The notion of the “PMC” was an effort to explain the largely “middle class” roots of the New Left in the sixties and the tensions that were emerging between that group and the old working class in the seventies, culminating in the political backlash that led to the election of Reagan. The right embraced a caricature of this notion of a “new class,” proposing that college-educated professionals—especially lawyers, professors, journalists, and artists—make up a power-hungry “liberal elite” bent on imposing its version of socialism on everyone else.

The PMC grew rapidly. From 1870 to 1910 alone, while the whole population of the United States increased two and one-third times and the old middle class of business entrepreneurs and independent professionals doubled, the number of people in what could be seen as PMC jobs grew almost eightfold. And in the years that followed, that growth only accelerated. Although a variety of practical and theoretical obstacles prevent making any precise analysis, we estimate that as late as 1930, people in PMC occupations still made up less than 1 percent of total employment. By 1972, about 24 percent of American jobs were in PMC occupations. By 1983 the number had risen to 28 percent and by 2006, just before the Great Recession, to 35 percent.

But the PMC was not only a victim of more powerful groups. It had also fallen into a trap of its own making. The prolonged, expensive, and specialized education required for professional employment had always been a challenge to PMC families—as well, of course, as an often-insuperable barrier to the working class. Higher degrees and licenses are no longer a guaranty of PMC status. Hence the iconic figure of the Occupy Wall Street movement: the college graduate with tens of thousands of dollars in student loan debts and a job paying about $10 a hour, or no job at all.

The capitalist offensive

Beginning in the seventies, the capitalist class decisively re-asserted itself. The ensuing capitalist offensive was so geographically widespread and thoroughgoing that it introduced what many leftwing theorists today describe as a new form of capitalism, “neoliberalism.”

The new management strategy was to raise profits by single-mindedly reducing labor costs, most directly by simply moving manufacturing offshore to find cheaper labor. Those workers who remained employed in the United States faced a series of initiatives designed to discipline and control them ever more tightly: intensified supervision in the workplace, drug tests to eliminate slackers, and increasingly professionalized efforts to prevent unionization. Cuts in the welfare state also had a disciplining function, making it harder for workers to imagine surviving job loss.

Most of these anti-labor measures also had an effect, directly or indirectly, on elements of the PMC. Government spending cuts hurt the job prospects of social workers, teachers, and others in the “helping professions,” while the decimation of the U.S.-based industrial working class reduced the need for mid-level professional managers, who found themselves increasingly targeted for downsizing. But there was a special animus against the liberal professions, surpassed only by neoliberal hostility to what conservatives described as the “underclass.” Crushing this liberal elite—by “defunding the left” or attacking liberal-leaning nonprofit organizations—became a major neoliberal project.

Of course, not all the forces undermining the liberal professions since the 1980s can be traced to conscious neoliberal policies. Technological innovation, rising demand for services, and ruthless profit-taking all contributed to an increasingly challenging environment for the liberal professions, including the “creative ones.”

Now, a little bit of magic and research from Dahn, an adjunct faculty member in the game called higher education who is on the Adjunct List Serve, connecting to hundreds of folk throwing around adjunct issues, and so-so much more around higher education, labor, unionism, rights, social justice, economic justice.

Dear Paul,

My bio-sketch:

“Working class sociologist and adjunct instructor living in Southern New Jersey.”

Here’s my synopsis:

The University of Phoenix business model appears to be imploding. Apollo Group stock is at its lowest price in 5 years, and there are at least two major stockholder lawsuits pending. Phoenix may also be facing a two-year probation for its low graduation rates, high default rates, questionable credit hour policies, and over-reliance on federal funds (e.g. Pell Grants, VA benefits).

Apollo Group’s practices of maximizing profits for its executives, minimizing worker pay, and reducing education to its lowest common denominator may finally have caught up with them. Stockholders, students, law firms, accrediting agencies, and the federal government are asking difficult questions that Phoenix officials cannot answer honestly. Apollo Group could meet the same fate as Enron and other corporate predators, as employees gossip about possible insider trading. Only time will tell whether this will lead to Apollo’s demise, or whether the corporation can rise again.

If Phoenix does crumble, there are many more predatory for-profit schools to take its place. We all need to inform working class people about the downsides of taking courses from University of Phoenix and schools like this. We also need to let people know about pubic education alternatives, such as community colleges. Apollo Group stock continues to drop to its lowest price in over 5 years and workers are talking about questionable trades at the layoff.com. Here’s the List of Insider Trades at Apollo Group. Note that the number of trades has declined significantly.

The University of Phoenix is a failing organization using a failed business model. Phoenix, and its parent company, Apollo Group, have exploited veterans and working class individuals (often people of color) over the years to maintain their profits.1

Recently however, proprietary (“for profit”) schools has been facing greater scrutiny from the federal government: from the Government Accountability Office (GAO) and more recently from the Harkin Commission.2

Through Title IV funds, VA loans, and direct student loans, the federal government has provided more than 80% of UOP’s funding. From 2009 to 2011, for example, Phoenix received $196 million in VA benefits.3

According to the US Department of Education’s College Scorecard, the University of Phoenix has a 17% graduation rate and a 26% default rate. The average University of Phoenix graduate will have about $64,000 in student loan debt, with an unknown possibility of finding a job in their major. Credits are unlikely to transfer to other, more legitimate schools.4

In 2013, the University of Phoenix faced serious issues with accreditation. While the results have not been published yet, Apollo Group shareholders have hired a law firm, Hagens-Berman, to investigate whether Apollo Group officials knew of these concerns but failed to notify their investors. Hagens-Berman is seeking employee whistle blowers who may know about these concerns.5

Recently, the University of Phoenix has been closing campuses and laying off employees with limited notice. Worker grievances have been aired publicly on the Internet, exposing possible racism and sexism in the organization. Workers have also discussed the possibility of insider trading by Apollo Group executives. 6

Power Analysis of Apollo Group (University of Phoenix)

I. Accrediting Agencies

60 accrediting agencies

Under scrutiny (Harkin Commission report)

Similar to Moody’s and bond rating agencies before the economic collapse?

Higher Learning Council (“HLC”) regionally accredits University of Phoenix. Information on them difficult to find. Not listed in Wikipedia.

Whistleblowers receive $19 million for uncovering fraud at University of Phoenix (December 15, 2009).

University of Phoenix Settles False Claims Act Lawsuit for $67.5 Million

“WASHINGTON — The Justice Department announced today that the University of Phoenix has agreed to pay the United States $67.5 million to resolve allegations that its student recruitment policies violated the False Claims Act.

This case began as a whistleblower action filed in the Eastern District of California under the False Claims Act, which permits private citizens to bring lawsuits for fraud on behalf of the United States and to share in any recovery. Whistleblowers Mary Hendow and Julie Behn, two former University of Phoenix employees, alleged that the university accepted federal student financial aid while in violation of statutory and regulatory provisions prohibiting post-secondary schools from paying admissions counselors certain forms of incentive-based compensation tied to the number of students recruited. Though the United States did not intervene in this action, the Government provided support and assistance to the whistle-blowers at many stages of the case, including filing friend-of-the-court briefs when the case was on appeal to the Ninth Circuit. The two whistle-blowers will receive $19 million from the settlement.”

“Inspector general of the U.S. Education Department has issued a harsh assessment of the Higher Learning Commission of the North Central Association of Colleges and Schools, one of the nation’s six regional accreditors, recommending that the secretary of education consider limiting, suspending, or terminating the organization’s status.”

“From 2009 to 2011, the VA paid $196 million to the University of Phoenix, $175 million to ITT Tech, $128 million to DeVry University, about $50 million each to Kaplan and The Art Institutes, and $28 million to Westwood College.”

While Senator Harkin’s report identifies regulatory problems at the federal and state level, it takes special aim at the regional and national accreditors that have come under harsh scrutiny during several committee hearings.

The flaws attributed to accreditation in the report largely echo the committee’s previous criticism of the process, including that accrediting agencies are guided by industry insiders who have an interest in preserving their peers, that accreditors do not have the capacity to adequately evaluate the largest for-profit institutions, and that their policies have not kept pace with the deceptive tactics that some for-profit colleges are accused of using to maximize profits.

“The self-reporting and peer-review nature of the accreditation process exposes it to manipulation by companies that are more concerned with their bottom line than with academic quality and improvement,” the report says.

Judith S. Eaton, president of the Council for Higher Education Accreditation, which represents some 3,000 degree-granting institutions and recognizes 60 institutional and programmatic accreditors, said accreditors and colleges were well aware of the criticisms. “We have been discussing many of the issues raised in the report for the past few years,” she said in a written statement. “They are important to our future, to students and to society.”

Representatives of one accrediting organization highlighted in the report, however, took exception to it. Albert C. Gray, executive director of the Accrediting Council for Independent Colleges and Schools, said some of the characterizations in the report “seem to show a fundamental lack of understanding of accreditation process and standards.”

The report accuses the Accrediting Council of having standards that are the “least stringent” among accreditors of degree-granting institutions.

Mr. Gray said the report doesn’t back up that assertion with evidence. He also said that comparisons among accreditors would be difficult because the council is the only national accreditor with a majority of members that grant degrees. Most national accreditors assess colleges and programs that don’t grant degrees.

Mr. Gray’s organization, which accredits more than 850 career-oriented colleges, has been in the spotlight recently, since the Career Education Corporation reported problems with the claimed job-placement rates at 49 of its health and art-and-design colleges. The Accrediting Council accredits the colleges.

To deal with that concern, the council has started a pilot program that involves hiring two “well known” auditing firms to more thoroughly verify the 2011 job-placement reports of 10 member colleges. The findings will be used to examine how the council evaluates those figures, Mr. Gray said.”

BarmakNassirian of the American Association of Collegiate Registrars and Admissions Officers described the accreditation system as a “racket” filled with self-dealing and too-low standards — most of those who joined the day’s parade of criticism urged the Education Department panel to proceed cautiously.

For example, Apollo, parent company of the University of Phoenix, paid $78 million to settle a 2002 lawsuit claiming that it illegally paid its recruiters based on the number of students each recruiter enrolled.109 In 2005, following a “60 Minutes” report on CEC’s recruiting practices, the company’s schools were investigated by State agencies in New Jersey and Pennsylvania, the U.S. Department of Justice, the U.S. Department of Education, and the U.S. Securities and Exchange Commission.110 Altaowned Westwood recently settled with the Colorado attorney general for allegedly misleading students and falsely advertising job placement rates, salary, transfer of credits and other important information.111 Many other schools, including Corinthian Colleges, Inc. and ITT, have faced shareholder and whistleblower lawsuits stemming from their recruiting practices.112 The companies, as well as their lobbyists and trade associations, blame these practices on a few “bad apples” among an otherwise well-trained and ethical enrollment staff. The investigation, however, found that the tactics associated with recruiting students to enroll in for-profit colleges are widespread. Internal company documents, undercover recordings by the Government Accountability Office, HELP Committee staff interviews with employees and students, and testimony and statements from former recruiters all demonstrate that recruiters at many schools are trained to aggressively pursue and enroll as many students as possible, often with little regard for ethical standards or the best interests of the prospective students. At many schools, at least during the period examined, misleading students to secure enrollment contracts appeared to be a common practice rather than an exception. Faced with evidence of recruiting abuses, many companies operating for-profit colleges point to their official policies setting out high ethical standards for their recruiters

I will get to more on this entire mess in higher education, soon, but until then, bombard this creep at Harvard Business Review with comments standing down his critique that less education is necessary. We need FREE public education, CEOs who do not get paid, Corporations paying taxes, and debt jubilee or forgiveness. Point Blank. My long, smart and in your face was scrubbed. These Ivy-Icy Leaguers are what I wrote about yesterday, Dog-paddling to Bedlam:

We hope the conversations that take place on HBR.org will be energetic, constructive, and thought-provoking. To ensure the quality of the discussion, our moderating team will review all comments and may edit them for clarity, length, and relevance. Comments that are overly promotional, mean-spirited, or off-topic may be deleted per the moderators’ judgment.

All postings become the property of Harvard Business School Publishing

And, finally, just as a teaser, we will be looking at Ana Maria Fores Tamayo’s battle in Texas with Tarrant County Community College bad dealings, and we shall also look at the Scoop It world of A is for Adjunct, right here. Check it out now. Your homework. Tons of resources coming at us by Vanessa. Join it.

Finally, really, now, that Harvard blogger is way off, and I hope McAfee goes to some of Giroux’s work. Let’s hit the road on this note: Critical pedagogy, a la Giroux, et al.

First, I think it is best to think of critical pedagogy as an ongoing project instead of a fixed set of references or prescriptive set of practices–put bluntly, it is not a method. One way of thinking about critical pedagogy in these terms is to think of it as both a way of understanding education as well as a way of highlighting the performative nature of agency as an act of participating in shaping the world in which we live. But I think the best place to begin to answer this question is to recognize the distinction between a conservative notion of teaching and the more progressive meaning of critical pedagogy. Teaching for many conservatives is often treated simply as a set of strategies and skills to use in order to teach prespecified subject matter. In this context, teaching becomes synonymous with a method, technique, or the practice of a craft—like skill training. On the other hand, critical pedagogy must be seen as a political and moral project and not a technique. Pedagogy is always political because it is connected to the acquisition of agency. As a political project, critical pedagogy illuminates the relationships among knowledge, authority, and power. It draws attention to questions concerning who has control over the conditions for the production of knowledge, values, and skills, and it illuminates how knowledge, identities, and authority are constructed within particular sets of social relations. Similarly, it draws attention to the fact that pedagogy is a deliberate attempt on the part of educators to influence how and what knowledge and subjectivities are produced within particular sets of social relations. Ethically, critical pedagogy stresses the importance of understanding what actually happens in classrooms and other educational settings by raising questions regarding what knowledge is of most worth, in what direction should one desire, and what it means to know something. Most importantly, it takes seriously what it means to understand the relationship between how we learn and how we act as individual and social agents; that is, it is concerned with teaching students how not only to think but to come to grips with a sense of individual and social responsibility, and what it means to be responsible for one’s actions as part of a broader attempt to be an engaged citizen who can expand and deepen the possibilities of democratic public life. Finally, what has to be acknowledged is that critical pedagogy is not about an a priori method that simply can be applied regardless of context. It is the outcome of particular struggles and is always related to the specificity of particular contexts, students, communities, available resources, the histories that students bring with them to the classroom, and the diverse experiences and identities they inhabit.

Paul Kirk Haeder has been a journalist since 1977. He's covered police, environment, planning and zoning, county and city politics, as well as working in true small town/community journalism situations in Arizona, New Mexico, Texas, Mexico and beyond. He's been a part-time faculty since 1983, and as such has worked in prisons, gang-influenced programs, universities, colleges, alternative high schools, language schools, as a private contractor-writing instructor for US military in Texas, New Mexico, Arizona, and Washington. A forthcoming book (Dec. 15, 2016), Reimagining Sanity: Voices Beyond the Echo Chamber, looks at 10 years of his writing at Dissident Voice, and before, to bring defiance to the world that is now lobotomizing at a rate never before seen in history. Read his autobiography, weekly chapter installments, at LA Progressive. Read other articles by Paul, or visit Paul's website.